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Edited version of your written advice
Authorisation Number: 1013099029294
Date of advice: 4 October 2016
Ruling
Subject: Assessable income - dividend
Question
Does The Trust's assessable income include a dividend not paid to them?
Answer
No
This ruling applies for the following period
1 July 20XX to 30 June 20YY
The scheme commences on
1 July 20XX
Relevant facts and circumstances
The Trust is the shareholder of the Company.
The Trust did not receive cash from the Company as payment of a dividend in the income year.
The Trust did not agree to treat an amount loaned from the Company as a dividend in the income year.
The Trust did not receive a dividend or distribution statement from the Company for the income year.
The Company's income year financial statements do not show a dividend paid to the Trust out of retained profits, any disclosure of a dividend paid or any amount credited to the Trust as a dividend distributed.
Relevant legislative provisions
Section 44 of the Income Tax Assessment Act 1936
Section 6(1) of the Income Tax Assessment Act 1936
Reasons for decision
Under section 44 of the Income Tax Assessment Act 1936, the shareholder of a company includes in their assessable income dividends that are paid to them by a company out of profits (or an amount other than profits).
'Paid' defined in section 6(1) in relation to dividends to include amounts credited or distributed.
A dividend is 'credited', so as to have been paid, when a dividend has been declared, profits are appropriated to its payment and the shareholder's account with the company is credited so it may be drawn on by the shareholder.
In your case, the Company has not paid, distributed or credited an amount as a dividend to the Trust. Therefore the Trust's assessable income does not include a dividend not paid for the income year.